Brickell’s office market recovers after a boom and bust

The strategy of “build it and they will come” is being tested in the Brickell office market, which had about 2 million square feet of new office space added to the market in the last few years.

The full story of the new product has not unfolded, with only one of the three new buildings, 1450 Brickell Ave., reaching full occupancy.

The other two, 600 Brickell and the Wells Fargo Center are more than half full. Although the Wells Fargo Center is just north of Brickell, its proximity to the city’s banking and finance district means it competes with buildings on Brickell.

The push for new space came during the last boom. Expectations of new tenants coming into to the market drove leasing rates higher along with prices for land and buildings.

The recession pushed vacancy rates to 21.8 percent in late 2010, but that’s down to 17 percent in Brickell now. A major expansion from existing tenants and more newcomers are needed to push vacancies down to 10 percent, according to Newmark Grubb Knight Frank.

Michael Taylor of Stiles say that 10 percent goal is not likely because the absorption, except for some exceptions, has not involved a lot of in-migration.

Jones Lang LaSalle’s Noel Steinfeld, who is leasing 600 Brickell, said, “I would say that Brickell’s office market is moving into a more and more strong position, with both absorption and tenants locked into long term leases so you won’t see a lot of movement in the next few years.”

Class a property status quo

There is little new Class A coming to market. Swire’s Brickell CityCentre has 110,000 square feet of office under construction with a delivery date of 2015, but a good portion is focused on Latin Americans coming for doctor visits and heath-related reasons, said Swire Properties President Stephen Owens.

A key to lowering the vacancy rate is attracting more financial service firms from Latin America and multinationals, such as SABMiller Latin America, maker of Miller, Corona and Coors Lite, which took 25,000 square feet at 1450 Brickell as part of a relocation from Bogota.

Danet Linares of Blanca Commercial, which leased 1450 Brickell, is working with the Miami Downtown Development Authority to attract hedge funds by spotlighting Florida’s tax incentives and lack of a state income tax.

She also said Miami’s tech community is growing and is expected to take a leap forward with the help of The Knight Foundation, Manny Medina’s eMerge Americas event and the arrival of Endeavor Global, which is pairing local tech entrepreneurs with mentors.

But the growth is not without its growing pains.

Steinfeld said public transportation needs to become more efficient, especially if the employment base in Brickell isn’t big enough and sparks more commutes.

There could also be an issue if there aren’t enough jobs for residents who move to Brickell because it’s a cool place.

Steinfeld said, “Just because you move somewhere doesn’t mean there is a job waiting for you.”